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Trade press blinkered on agency trading desk ‘arbitrage’ dispute, says media agency exec

Arun Kumar

Kumar: “The press has focused on the negative”

A simmering dispute between clients and agencies in the US over how automated internet advertising is traded has been blown up by the trade press and is unlikely to delay the growth of agency trading desks in Asia, a senior media agency executive has said.

Arun Kumar, who oversees Mediabrands’ online trading unit Cadreon in the biggest markets outside the US, told Mumbrella that the reporting of a perceived lack of transparency in agency trading desks has “ignored what the full range of challenges and opportunities are for advertisers” – though he conceded that global clients would be asking the same questions of their agencies in Asia.

Trade titles such as Adweek have been reporting heavily on the issue of arbitrage in online media buying in recent weeks, with several advertisers choosing not to use agency trading desks for fear that they are being overcharged.

Global brands such as Ford, Procter & Gamble, Unilever and Kimberly-Clark have pulled funds from agency trading desks in the US because they feel their agencies cannot adequately explain how their money is being spent.

Agency trading desks compete with publishers and sales houses by aggregating multiple ad exchanges in one place, but critics say the client is often unaware how much of their budget is actually being spent on media, and how much the agency is keeping for itself.

Kumar, who is president of Mediabrands Audience Platform for IPG’s key markets outside the US, said: “It does not take rocket science on the side of the client to work out if an agency is involved in arbitrage,” he said, pointing to other parts of the industry – such as television – where there is often a lack of transparency over client spend.

Cadreon’s job is to meet client objectives and stick to a budget, Kumar said. “That these objectives have to be verified by the client goes without saying,” he said.

“Media agencies have long term contracts with our clients, and if they’re not happy they will go elsewhere. It’s as simple as that,” he said. “The idea that we dictate where clients spend their money is wrong.”

“We encourage our clients to spend across multiple channels, because that is where you get value. Yes, we compete with publishers. But we always encourage clients to use multiple platforms,” he said.

That conversations Mediabrands has with clients at a global level are “not just five-minute conversations of gobbledegook” and involve exploring how “data, media and technology can be used in collaboration with each another”.

“Unfortunately, there have been so many panel debates on the topic, and the press has chosen to focus very narrowly on the negative,” he said.

What is not discussed is the level of investment needed in the technology on the agency side, he said.

“It’s not as simple as taking a platform that is used elsewhere. You have to build layers on top of a unique platform. You need systems that integrate multiple sources of data, and this varies considerably by market.”

Also, the data online trading generates “teaches us about audiences” and that intelligence can be pushed out to other channels, he added. “We make sure clients benefit from the insights generated from what we do.”

While trading desks are still in their relative infancy in Asia, Kumar said that clients in Asia “are not behind the curve” on online media trading and are well aware of the issues at stake.

Will the heated debate in the US put trading desks on hold in this region? “It’s early days yet. The first movers will be global clients, and we’re having frank and open conversations with them right now. With any new discipline, these things take time,” he said.

Mediabrands has media trading desks set up in China, Japan and Australia and is “expanding aggressively” this year, with operations to launch in Southeast Asia and India. By the end of 2013, 80-90 per cent of the markets in Asia Pacific will be covered, says Kumar.

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